It's true. People who grow food are starving.

Many of the farmers that grow the cheap food we throw in the bin every day can no longer feed themselves.

If the world already produces enough food to feed 12 billion people, why do we keep hearing about food security and not food waste?

In my last blog I proposed that to better-understand and find opportunity in the globalised food system, food waste was the elephant in the room.

Does this mean that the issue of food security does not exist?

Unfortunately, food security is a very real issue in many parts of the world.  Shamefully, food security is now an issue in the many regions that were once happily feeding themselves.

 

But if we are overproducing food how is it so?

For centuries subsistence farming has held-together rural communities in many third-world countries.  As the commoditisation of food has diminished the quality and availability of existing arable land, vast areas of native vegetation have been cleared to provide new land to grow crops.  To achieve this, those in control of the global food system have broken-down the subsistence farming model with the lure that poor rural communities can become rich.

Many of the crops grown are for export.  These are crops that can’t be eaten until they are processed or refined somewhere else e.g. coffee.  Basically a cheap way of growing food for someone else that can pay a higher price for it.

In many rural communities mono-crop farming has gone horribly wrong.  The local people no longer have neither their own food supply nor can they afford to buy food, because the cost of modern farming has sent them broke.  And to top it all off, they can’t return to their traditional ways because the ecology of their native land has been destroyed.  They are trapped in a vicious cycle of clearing more land.

Clearly, the issues of food security and food waste are unsustainable in today’s global food system.

Why am I picking on this?  It’s not why you think.

Consumer tipping point

If you are involved in agribusiness and food, then the topics of food security and food waste are a lesson in what it means to be consumer-centric.

Why is this important?

There is a HUGE groundswell movement by consumers who are demanding to understand the global food system.  We are on the verge of a tipping point whereby consumers will have a better understanding of the global food industry, than many of the operators in it.

This is significant because consumers will be making purchasing decisions based on their understanding.  So when they buy their food they will be seeking-out messages that demonstrate you understand to.

Do you truly understand what it is going on in your industry?  You need to understand the food system so that you know how to look for and identify the next market opportunity.

If you don’t understand what is happening in the food industry, you will not give-off the right messages and your products will not sell.

The non-price characteristics of food and food experience are the fastest growing phenomenon in food.  It provides small to medium operators an incredible niche opportunity to different themselves by projecting the right messages in the areas of:

•          Sustainability
•          Ecologically sound
•          Land clearing
•          Water usage
•          Food waste
•          Organic
•          Non GM
•          And so on.

There is more than enough room in all this to really build-up the intrinsic value of your products in the minds of consumers.

The higher the intrinsic value, the more money you make.

The Great Global Food Waste Scandal.

If the world already produces enough food to feed 12 billion people, why do we keep hearing about food security and not food waste?

Instead of hearing a story about the need for food security, we should be hearing a story about the need to reduce food waste.

Did you know that about a third of all food produced is thrown away at some stage.  In fact, in some sectors up to 40% of food produced is thrown away before it even gets to the first stage of processing.

The answer is because the global food system is now controlled by a powerful few that are in the business of selling, not reducing.

These organisations have been grooming us to be consumers of processed foods, and have been grooming farmers as consumers of inputs.  In many instances it is the same company in the business of both.

Positioning yourself in the middle of the food supply chain is precarious but highly profitable.  Like any supply chain, it is precarious in the sense that if consumers can get closer to the origin of their food, then mid-market participants would be out of business.

Consequently, they have been aggressively establishing their position, consolidating and defending it.

But to keep making loads of money, two things need to keep happening:

-                        -  Farmers need to keep overproducing,

-                      -  And we need to keep overeating.

Reducing global food waste is the elephant in the room, because less waste means food would be cheaper, healthier, more accessible, less repeat-purchase of processed food products by consumers and less inputs used by farmers.

This great presentation really sets the scene:

High-levels of food waste actually keep the global food system inelastic enough for a powerful few to make a huge amount of money.

This also means there is no buffer for production shocks such as drought, which means they make even more money during times of adversity.

For these companies it is vital that a third of the world’s food is wasted.

I think consumers understand the issue of food waste very easily and are suspicious of the food security and productivity argument e.g. GM crops.  Consequently, food waste is a story not often told.

This presents some awesome marketing opportunities for savvy food producers.  If you’re food waste responsible, let’s tell consumers the story.

 

It won’t be long before messages about responsible food waste are on the front of food labels at the behest of consumers.

As much as consumers can be sold a story by the powerful few, so can our farmers of the world.  In my next blog I’ll talk about the story farmers have been sold and how many of them can now no longer feed their own families.

To join in simply click on the word COMMENTS below.

Adelaide. Breathe. What the bloody hell is that?

One of THE most expensive mistakes in marketing is to make yourself feel good and not your customers.  It’s the oldest trap in the book.

And someone spending your money to scratch your ego is the oldest trick in the book.

Sometimes I get so frustrated when I see this happening I’m lost for words.  Especially when I know someone has kissed goodbye to a lot of money.

In particular I’ve been tracking the new cryptic campaigns about South Australia, because they are linked to promoting our regions, agriculture and food.  As I said, I’m mostly lost for words.

Quite frankly, the fact that some of these creations have won awards within their own art fraternity means diddly-squat to the client (or taxpayer) that paid for it and wants results.

So I asked local advertising guru Karen Zaskolny of www.copywithcream.com.au to take a look at the situation.  Karen is a straight-shooter with the ‘street cred’ to back it up.

Enjoy.

Wanky commercials that nobody gets.

There seem to be a few ads around lately that are so out-there, nobody has a clue what’s going on. Self-indulgent, arty ads that I think don’t work. Like the new ad for Adelaide. Maybe it’s a case of The Emperor’s Clothes, where you have to be really clever to get it. I obviously failed this IQ test. Do you pass? Here it is.

But who is this ad made for?

Are we making ads to make ourselves feel better because we have an identity crisis in Adelaide? Or are we really making something for the Eastern states? According to the article in Travel Weekly, our Premier said “It will get people talking about and travelling to Adelaide to find out for themselves what it is that is changing here.”

I hate to burst Jay’s bubble but according to market research conducted recently in the Eastern states, people’s response to Adelaide was actually ‘nothing’ – not negative or positive, just neutral. They really don’t care. And I’m not sure this ad will make them change their minds. They definitely won’t jump on a plane on the off-chance. Personally, I’m into recycling, so I reckon we could re-edit the previous ad for Adelaide, which at least showcased our festivals. Here’s the link for that one. 

http://youtu.be/QgjpVQZ4Xxc#aid=P8viDeo9RRQ

The ad is made by the same mob as did the Barossa ad a short while back. I’m sure you’ve seen it but if you haven’t, here’s the link.

http://youtu.be/MoMp-V_CRdc#aid=P8viDeo9RRQ

‘So where the bloody hell are you?’
The new Adelaide ad not only makes me think ‘What the bloody hell is going on?’ it also makes me think ‘Where the bloody hell are you?’ because the ad makes you wait till the end — a minute and a half! — before telling you that you are actually in Adelaide.

Speaking of the famous ‘Where the bloody hell are you?’ Lara Bingle ad, that’s another one that missed the mark. Why? Because that tagline was clearly written for Australians. In fact, if the ad had been designed for Australians who’d moved overseas as part of the big brain-drain and wouldn’t come home, it mighta worked bonza. If you can’t remember the ad (and I’d be surprised) here it is.

It’s all a bit like the upside down ads in the paper

Years ago, I used to work at The Advertiser Newspaper, where part of my job seemed to be to try and stop clients doing stupid things. There was always the client that insisted on putting their ad in the paper upside down, thinking they were really clever. They wouldn’t believe us when we told them that sorry, nobody is going to put in the extra work needed to turn the paper round and read your ad — they’re busy flicking through to the Sports section. In much the same way, nobody is going to care about sitting through an ad that looks like 10 different movie trailers. In fact, the only place you’d sit through the ad is at the movies, because you are forced to. No remote.

Testing, testing…
It was also while I worked at the paper that I learnt a really good lesson. Just because I get the ad, doesn’t mean everybody else will. So I came up with a test. I’d come up with the ad concept, do a visual and then show the creative team. But they were creative. They weren’t the man in the street. The man in the street was the rep. Which was the real test. So even when I got a ‘yes’ from the creatives, I wouldn’t assume I could go with it.

Because creatives are not the man in the street
So, off I’d trot to the sales department and show the reps, one by one. If 9 out of 10 got it immediately, I’d present it to the client. But if half of them said “Sorry, I don’t get it…” I’d go back to the drawing board. It didn’t matter that I was ‘only’ working on $50 ads, not $500,000 TVCs, the principle was the same — no matter how much I love what I come up with, it’s important to make sure the target audience gets it. Otherwise, I’m just being self-indulgent.

Who is the target audience, anyway?
The question I always, always, always ask a new client, very early on, is — ‘Who exactly is your target audience?’ And I keep asking until I either get a clear answer from them or they let me help them find the answer. Only then will I start the process of trying to come up with ideas and direction for their advertising and communications.

The Kangaroo Island ad
The Kangaroo Island ad is also arty but at least it shows a family (who I assume is the target audience?) holidaying there and doing stuff together. It’s been well over 30 years since I visited Kangaroo Island but I can immediately recognise some of the touristy places in the commercial, so I think it portrays it fairly accurately for an arty ad. Here it is.

Why does the Eyre Peninsula ad feature 2 young women?

I wouldn’t have thought this was the target audience. But at least they show them doing things you can do on Eyre Peninsula. (Which they are promoting as a little bit scary.) They also set the scene at the very beginning of the ad by spelling out, on the screen, in words, Eyre Peninsula. Perhaps the target audience is young men? Who would never admit they’re scared of anything but who might well be enticed to go to the Eyre Peninsula because they think there are cute young girls holidaying over there? Maybe the idea was like getting the girls into the nightclubs with cheap drinks because the boys will follow? I have no idea. But here’s the link.

http://youtu.be/N0E0bQEuQow#aid=P8viDeo9RRQ

But it all kinda reminds me of Melbourne
Looking at all these ads together kinda reminds me of that old TV commercial for Melbourne. Remember? The one with the girl with the ball of string? Personally, I really liked it, even though it took me three viewings to get it. (Another epic fail in the old IQ test, clearly.) But did it work? I have no idea. Here it is.

Art for art’s sake

I hate bad ads that yell at you and/or treat you like you are an idiot. But I’m also not a fan of arty ads that appear to be have been made by frustrated film directors who’ve been given a big bag of money and a very long leash. Surely there’s a middle ground.

To start or join the discussion, simply click on COMMENTS below.

Australian agri-food producers are behaving more and more like miners.

This week, when most of us sit down with a glass of Christmas cheer to reflect on the year just finishing and speculate about the one ahead, we’d be feeling much better about life than the last few Christmases.  However, unlike those in the sector who’ll be checking off the year’s wins, my reflections are likely to be laced by a sense of frustration and lost opportunity, despite all the hype about the rosy future of agrifood. 

For a start, the Gillard government tried its hardest to kill us all off. The National Food Plan and Asian Century papers were big on philosophy but totally lacking in pragmatic policy direction. The mishandling of the live cattle trade did serious long-term damage and offended a strategically important customer. The carbon tax and the pro-union attitude of that government put the nail in the coffin of our few surviving food manufacturers, most of who were already in the intensive care ward.  At risk of sounding like the Christmas Grinch, I don’t feel that confident that the Abbott Government will do much better. It seems that the agrarian socialists are running the show.

Any thinking person looking at the Australian agrifood sector from afar must be totally confused by the Graincorp/ADM debacle and the hysteria around the Warrnambool Butter and Cheese takeover. It shows that the most vociferous defenders of the farming sector are either extremely xenophobic or extremely naïve. Effectively they are willfully destroying the sector that they claim to be so passionate about protecting.

The reality is that most industries within the Australian agrifood sector are in a critical situation. Many food processors have moved off shore or closed down and others are seriously questioning their future in this country.   SPC is contemplating closing its Goulburn Valley facilities with a loss of 2000 direct jobs. The impacts of such closures are not just economic; the social consequences for regional communities are more devastating.

There is no doubt about the growth prospects for agrifood in the Asian region. The demographic data forecasting the rising Asian middle class is conclusive.  But the tired old proposition that Australia will become the “food bowl to Asia” or leaders in a “dining boom” as advocated by the many agrifood think tanks, is still a bit hard to swallow, even in the current environment.

The reason it is unrealistic is that much of the growing global demand for food is at the highly contested and competitive, low end of the market.   Australia sells undifferentiated commodities at world parity prices, with all the volatility that comes from being a global commodity trader. If Australia is to truly cash in on the Asian opportunity, it needs to target the high-end, premium food segments by developing differentiated products built around the brand values of provenance and safety.

But the reality is that in this space, Australia is hopelessly uncompetitive and poorly skilled. With a weighted average labour cost of $55 per hour for a factory worker compared with $18 in New Zealand and $4 in China, we are not in the game, even when the $AUD is around $US 80 cents. Our factories are old and inefficient, our energy and water costs have risen sharply and the cost of compliance with complex, government-imposed red tape is crippling. The road, rail and port infrastructure greatly adds to cost; the majority of secondary roads don’t have legal B Double access.  Furthermore, our capabilities in marketing, supply chain development and export market development are poor.

If Australia is to be a global player in food we need a massive investment in infrastructure, new plant and equipment and technology. This capital must come from overseas investors because the industry doesn’t have the money and Australian retail investors are gun-shy about agrifood, seeing it as too volatile and risky (no wonder when it is so poorly managed and government policy is so unstable).

We need active investors who can bring more than capital alone. We need their global supply chain and cultural connections and market knowledge. Passive superannuation fund and short-term equity players are not the answer.

Politicians need to let global agrifood world know that we are open for business. The starting point is some sensible, coherent policy that should include:

·         A pro-foreign investment policy (with adequate safe guards).

·         A flexible work force policy that recognizes the 24/7 and seasonal nature of perishable agrifood products.

·         Accelerated depreciation and incentives to invest in automation and technology.

·         Government investment in infrastructure, roads, rail, ports, electricity, gas, water and waste water recycling, bio-digester technology and co-generation.

·         Cutting government red tape

·         Taxation incentives for mum and dad investors (although it was poorly managed the much maligned MIS did create world class, globally competitive and sustainable businesses).

·         Promoting agrifood as an up and coming career opportunity for young talented people.

·         Fewer expensive trade missions and more export capability building.

The alternative is for Australian agrifood to go the same way as Australian mining i.e. large, listed companies ripping huge volumes of low value commodities out of the ground for short term gain, letting other countries extract the value from the supply chain.  It seems that the miners and agriculturalists have more in common than they think.

About the author

Dr David McKinna is Principal and Director of global strategy consultancy McKINNA et al in Melbourne.  David’s commercial ‘street smarts’ belies his academic background.  Over 30 years of global consulting has given him deep insight into how markets work.  In particular, David has been the quiet achiever behind some of Australia’s most successful strategy break-throughs in the food sector.  His experience and expertise in agrifood spans paddock to plate.  David’s ‘tell-it-like-it-is’ style makes him a sought after speaker, writer and social commentator.  David was also a founder of the David Syme Business School at Monash University.

E: david@mckinna.com.au

W: www.mckinna.com.au

M: 0418 332 488

T: 03 9696 1966

An Australian Century is food for thought.

Asian markets alone will not save Australia.  International competitiveness and global scale will.  In particular, we must see ourselves as part of the global food system and plan to invest accordingly.

An Australian Century captures that sentiment nicely.  It puts greater emphasis on the need to be pulling the right economic levers domestically, whilst thinking globally – Asia and beyond. 

Talk of an Asian Century is appealing.  In particular, there is an overwhelming expectation on China making us wealthy.  However, abundant food exports are not a forgone conclusion because of our proximity to the Asian region.

The overriding limitation of our new national vision is it aspires to produce more of the same for some.  The risk lies in the political proposition Australia will now ride a food commodity boom and sell its way out of trouble.  Food markets do not operate like the resource markets we have been supplying.  When it comes to global food production, only a very small percentage is traded across borders.  Asia will buy Australia’s food commodities when it is convenient or cheaper to do so.

So let’s be clear.  Nowhere in the world does there exist a mass-market for food from Australia.  We are not anyone’s food bowl and we never will be.  Australia’s current contribution to the global food system is less than one percent.

Spruiking absolute numbers is cruel for those least likely to benefit, as the emerging situation in Asia is very complex.  The devil is in the detail.  For many it will be the realisation that opportunities in Asia are very limited.

My Australian Century includes getting our food industry in a competitive position to also do business with those we are not already close to.

The economies of many other countries are developing at amazing pace. Some will sustain their growth well past the bulk of Asia’s peak.  As we will soon find out in Asia, these new markets will be incredibly discerning about what foods they allow to be imported and in what form.  This will be driven by the nuances of local middle-class consumers and strong domestic policies.

In my Australian Century there is a re-balancing of public money invested in Australia’s long-held tradition of producing and exporting bulk foodstuffs.  The time and money required to sustainably re-intensify the primary production of food under Australian conditions is immense.   The world will not wait and many countries will close their productivity gap much quicker than Australia.
 

Future attempts to raise agricultural productivity will increasingly need to be funded by those most likely to gain in that sector, by developing new investment relationships with other companies in the global food system.

The emerging change in the composition of where and how food is purchased and consumed presents the most profitable and timely opportunity for Australia’s food industry.  Consumers put greater importance on convenience and packaging.  Food experience is the one key trend consistent in all emerging food markets.  Consumer purchasing behaviour now points directly to the non-price characteristics of food and so requires the innovation of Australia’s food processing sector in particular, to create tailor-made solutions and take advantage of these new preferences.

Arguably, Australia does not value its food processing sector.  While it is in survival mode, Australia’s competitors are in expansion mode.  We have been outpaced and outflanked in emerging value-added markets.  The result is we now import more value than we export.  Trying to becoming a food quarry and commoditising our food products will not economically mitigate these issues.

In my Australian Century we pursue a whole-of-chain approach to food innovation and transformation.  Australia’s food industry is characterised by its imagination and sophisticated thinking.  Anticipating and providing tailored food solutions is the best wealth-creation strategy Australia has.  We make the necessary structural and economic adjustments to allow this to happen.

Still, it is only those businesses with the strongest leadership that will make the hard decisions needed to survive.  It is the ambition and foresight of these people that will ensure our food industry will expand and prosper – whitepapers or otherwise; Asia or otherwise.